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Tuesday, November 08, 2005

Edmonton Price Increase Predicted to Lead Country in 2006

The following is an excerpt from a report released today by Re/Max. Similar reports have been published by many outfits at about this time for the past few years, and the annual results thus far have vastly exceeded expectations, so take the report with a grain of salt.

The RE/MAX Housing Market Outlook 2006 report found that the vast majority of major Canadian markets surveyed are expecting modest price appreciation ranging from 2 to 5% in 2006. The only exceptions are Vancouver, Kelowna, and Calgary, all of which are forecast to experience price increases of about 10 percent next year, the companies reported.

Nationally, home sales are forecast to climb 2 percent by year-end 2005, to 472,100 units – the best year ever for housing in Canada. Average price appreciation is expected to post a 9 percent gain, bringing the value of a Canadian home to $246,600.

“Affordability has certainly been a major concern, particularly in markets in British Columbia and Alberta, where average price has experienced strong upward momentum throughout 2005 due to tight inventory levels," said Elton Ash, regional executive vice president at RE/MAX of Western Canada. “An influx of new listings in the marketplace should ease some of the upward pressure on housing values and allow purchasers the luxury of time when buying a home."

The highest percentage increases in unit sales are expected to occur in Western Canadian markets next year, the RE/MAX offices reported. Edmonton and Regina are predicted to lead the country with a 5 percent increase over 2005 levels, and 61 percent of all markets forecast activity in 2006 to be on par with the previous year's figures.

Strong economic fundamentals are expected to contribute to healthy residential real estate activity yet again in 2006, according to the report. Western Canada, Newfoundland, New Brunswick and Nova Scotia, in particular, are expected to benefit from thriving oil and gas-related industries. Nationwide in Canada, billions of dollars have been earmarked for non-residential construction.

“Canada's economic engine continues to fire on all cylinders, outperforming expectations at every level," said Michael Polzler, executive vice president and regional director at RE/MAX Ontario-Atlantic Canada. “Consumer confidence levels are strong. Even the Bank of Canada's effort to put the brakes on the economy – boosting interest rates one half of one percentage point in a two-month period – only served to bolster home-buying activity. Interest rates could climb as much as two percentage points before we see any real impact on the housing market."

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